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VAT filing
VAT

What Happens If You Don’t File VAT on Time?

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Value Added Tax (VAT) is a crucial part of the financial system in Dubai and across the UAE. Businesses registered for VAT are required to file their returns on time as per the guidelines set by the Federal Tax Authority (FTA). Failure to comply can lead to severe consequences, including fines, penalties, and even legal action. VAT Filing in Dubai VAT was introduced in the UAE on January 1, 2018, with a standard rate of 5%. All taxable businesses must file VAT returns periodically, typically every quarter, unless they are required to file monthly. The VAT return submission and payment deadline is usually 28 days after the end of the tax period. If a business fails to file or pay VAT on time, it faces penalties and other legal consequences imposed by the FTA. Consequences of Late VAT Filing 1. Financial Penalties One of the most immediate consequences of missing the VAT filing deadline is financial penalties. The UAE’s tax laws are strict, and businesses are expected to comply to avoid significant fines. The penalties for late VAT filing are as follows: AED 1,000 for the first offense AED 2,000 for a repeated offense within 24 months Late payment penalty: If the VAT due is not paid by the deadline, an additional penalty of 2% of the unpaid tax is applied immediately. Additional penalties: 4% per month on any unpaid tax amount after one month from the due date. Up to 300% cumulative penalty if non-compliance continues over time. 2. Business Disruptions Late VAT filing can disrupt business operations. The FTA may flag non-compliant businesses, leading to increased scrutiny and audits. This can affect the company’s reputation and may result in additional financial burdens due to increased administrative and legal costs. 3. Legal Consequences Consistent non-compliance with VAT regulations can lead to further legal actions, including business license suspension or restrictions on conducting trade within the UAE. In severe cases, authorities may take legal action against the company’s directors or owners. 4. VAT Refund Delays If a company is eligible for a VAT refund, failing to file returns on time can delay the refund process. Businesses rely on these refunds for cash flow management, and any delay can create financial strain. 5. Increased Risk of Audits Companies with a history of late VAT filings or non-compliance are more likely to be audited by the FTA. Tax audits can be time-consuming, costly, and may lead to further fines if discrepancies are found. How to Avoid Late VAT Filing To prevent unnecessary fines and disruptions, businesses should implement best practices for VAT compliance: 1. Mark Important Deadlines Ensure that you are aware of your VAT filing deadlines and set reminders well in advance. Missing deadlines due to oversight is a common mistake that can be avoided with proper planning. 2. Maintain Accurate Records VAT filing requires accurate financial records, including invoices, purchase receipts, and tax calculations. Keeping these documents organized will make the filing process smoother and reduce errors. 3. Automate VAT Calculations Using VAT-compliant accounting software can help businesses automate VAT calculations, reducing the risk of errors and ensuring timely submission. 4. Work with a VAT Consultant Hiring a professional tax consultant can help businesses stay compliant with VAT regulations. Consultants provide expert advice, handle VAT filing, and ensure that all returns are submitted on time. 5. Plan for VAT Payments Ensure that you have sufficient funds set aside to pay your VAT liability on time. Delayed payments not only attract penalties but also affect cash flow and business operations. Final Thoughts Timely VAT filing is not only a regulatory requirement but also a critical factor in maintaining a strong financial position in the UAE. Late submissions can result in significant penalties, business disruptions, and legal complications. By staying organized, leveraging technology, and seeking expert advice, businesses can ensure compliance and prevent unnecessary financial strain. Maats Accountants and Consultants will help you with hassle-free VAT filing in Dubai, ensuring that you stay on track and avoid penalties. With our professional guidance, you can focus on running your business while we take care of your VAT compliance. Compliance is the cornerstone of a successful business in the UAE!

Emaratax in UAE, Maats consultants
VAT

Launching EmaraTax In UAE

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The Federal Tax Authority of UAE is to launch EmaraTax, a new integrated platform on 5 December 2022 to further digitalise tax administration and provide a better experience for taxpayers in managing their tax obligations. EmaraTax in UAE will be a major milestone in the tax system which is being launched after a series of assessments and consultations. The move to EmaraTax in UAE will start from Wednesday 30 November, end of the day and will be available for use on 5 December.   A New and Better Tax Platform EmaraTax in UAE will enhance the ability to administer taxes better and enable taxpayers to manage taxes in a simple, faster and transparent way. As a new tax platform, EmaraTax in UAE will integrate with important government entities; the UAE Central Bank and national technology-based programs including UAE PASS to update user experience. This coincides with the national digital agenda to utilize emerging technologies to build a solid digital infrastructure that helps individuals and the business community of the UAE. EmaraTax is easy to navigate and offers self-help options and assistance. EmaraTax in UAE will soon be available on mobile as well. The key features of EmaraTax are: Enhanced user experience Integrated user services Aligned to the UAE digital strategy Smart app   Easy To Use, Easy to Administer EmaraTax in UAE is to improve the users’ accessibility to FTA’s services, tax payments and obtain refunds. The new online platform also improves FTA’s ability to administer taxes with better, faster decision-making and earlier engagement with taxpayers. This integrated platform will not only help taxpayers but tax agents, legal representatives, foreign missions and diplomats, customs bodies and verification agencies. Once live, taxpayers will benefit from the upgraded and feature-rich online platform designed to revolutionise the way taxes are being managed. Also, the FTA will continue to launch additional services and features in phases, including an EmaraTax application for mobile phones. The FTA is dedicated to ensuring every taxpayer has an opportunity to understand the key features of EmaraTax in UAE. Taxpayers can join one of the daily EmaraTax in UAE webinars organized by the FTA in November to share details of EmaraTax. FTA has also launched a microsite with information about using EmaraTax, educational videos and FAQs. Important information about EmaraTax will be sent directly to taxpayers via email as well. FTA will be releasing more information about the features of EmaraTax and how the UAE is planning a transition to the new system. Some Key Facts About UAE Emaratax 300+ users involved in designing the services 60% re-engineering processes, i.e., 180 processes rebuilt from the ground up 199 services online – 84 more than the current platform offering an innovative user experience 12 new integrations with external systems enabling a range of new and easy functionalities   FTA has consistently improved its services to simplify taxation processes. In April, FTA launched a ‘whistle-blower’ programme to prevent tax violations and evasion. The whistle-blower programme allows FTA to receive reports from individuals on cases of tax evasion, tax-related fraud and violations of tax rules. The reports are verified by FTA authorities and monetary rewards are granted to the informants when certain conditions are met. In September, a paperless tax refund system was introduced by the UAE government for tourists visiting the country, eliminating the need to retain receipts. Through this initiative, electronic invoices were generated that allow visitors to claim VAT refunds.

VAT penalty reconsideration UAE
VAT

All you need to know about VAT penalty reconsideration in UAE

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The Federal Tax Authority is the regulatory body in the UAE in charge of the VAT laws and to collect the taxes and penalties on behalf of the government. The business firms and entrepreneurs are responsible to be aware of the tax laws of the country in order to ensure the smooth running of the company. If a business entity fails to follow the tax laws issued by the Federal Tax Authority, they will need to pay the fines and taxes. Tax payments and penalties decided by the FTA, as per the current tax laws, are to be mandatorily paid by the business entity. But there are instances where in a VAT registrant or a taxpayer disagree with the decisions of the FTA, they can apply for a VAT reconsideration.   UAE VAT Penalty Reconsideration The taxpayer who received a penalty from the Federal Tax Authority can apply for a VAT penalty reconsideration in the UAE for the review of the authority. It should be submitted within the 20 business days after receiving the penalty. The authority will review the decision and will remove the penalties if the taxpayer could prove his stand through the UAE VAT reconsideration. It actually gives an opportunity for a taxpayer to appeal for the review of the decision made by FTA.   Process of applying for the UAE VAT Penalty Reconsideration The VAT penalty reconsideration can be submitted through online. VAT reconsideration form is available on the website of the Federal Tax Authority. The concerned business entity can submit their application through the website and should provide the supporting details in Arabic only, English will not be acceptable in such cases.   Documents required to submit the VAT Penalty Reconsideration When a taxpayer is not convinced with the decisions taken by the FTA, taxable person can submit their request for the VAT reconsideration. The VAT reconsideration forms can be submitted by the tax registrant, non-registrant or by a tax agent and this submission must be supported by strong evidence and relevant documents to prove why a penalty should not be imposed on them.   The following are the documents required for the submission of UAE VAT reconsideration; The certificate of VAT registration Emirates ID Passport copy Proof of authorization Formal letter of case study explaining the reasons along with supporting documentation with legal references Date and amount of penalty, registered mobile number and memorandum of association are some of the important details which should provide along with the above-mentioned documents. FTA will respond within the 40 business days. And they will request for additional information for incomplete information. And the response from FTA after the re-submission of application will also take up to 40 business days.   How MAATS can help your business? As part of making an appeal for the reconsideration of penalties, a notice has to send. It should be done within 20 days from the date of notice or letter issued by FTA informing about the penalty amount which should be paid. The appeal should be written in Arabic and should send within 20 days itself, late applications can be rejected. Approaching a tax consultancy to ensure the timely reconsideration process is inevitable. Our experts in MAATS have years of experience in tax consultancy services and will make you experience the ease of procedure in the VAT reconsideration processes. MAATS assisting clients for all their VAT penalty reconsideration processes from the submission of the application to the final discussion with the FTA representatives. We continue to help our clients to be VAT compliant and offering a wide range of VAT related services for companies across the UAE.

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